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Debt yield calculator
Debt yield divides a property’s net operating income by the loan amount: the return a lender would earn if it took the property back tomorrow. Neither the rate, the amortization nor the appraisal changes it, which is why CMBS lenders size to it and many banks run it alongside coverage and leverage.
What is the debt yield on a sample loan?
| Input | Value |
|---|---|
| Net operating income | $215,000 |
| Loan amount | $2,000,000 |
| Debt-yield floor | 10.00% |
Debt yield10.75%
- Debt yield: $215,000 ÷ $2,000,000 = 10.75%.
- Largest loan a 10.00% floor allows: $215,000 ÷ 0.10 = $2,150,000.
At 10.75% the loan clears a 10.00% floor with about $150,000 of room. Only more income or a smaller loan moves this figure.
How is debt yield calculated?
Debt yield = Net operating income ÷ Loan amount
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How do you read the result?
Debt yield caps leverage when the other two tests flatter the deal: coverage improves with a longer amortization or a lower rate, and loan-to-value improves with a generous appraisal. Debt yield moves with neither, so when it governs the loan is sized to income alone.
Below the floor there are two remedies: raise the income the lender will underwrite, or borrow less. A longer amortization, a rate buydown or an interest-only period does nothing here.
Frequently asked questions
Which lenders size to debt yield?
CMBS programs use it as a primary sizing test, and many banks and life companies run it alongside coverage and leverage. Agency multifamily programs size mainly on coverage and loan-to-value, and bridge lenders lean on value and the business plan, so ask each quoting lender which test binds.
What is a good debt yield?
Each program sets its own floor by property type and market. Compare the floor on each quote; it tells you how much of the leverage on offer you can use.
Does debt yield use the same NOI as DSCR?
In principle, yes: the lender’s underwritten NOI. In practice the yield test often runs on a more conservative income with a management fee and reserves added, so expect the lender’s figure to be lower than yours.
Can I have a strong DSCR and still fail the debt-yield test?
Yes, often when rates are low or the amortization is long: the payment is small, so coverage looks generous, while the balance is large relative to income. The yield test is built to catch that.
What does YieldStack do?
YieldStack is a commercial mortgage brokerage. Every term sheet comes from a lender in the network and is subject to that lender's underwriting.
Does it cost anything to see terms?
No. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing.
Is financing guaranteed?
No. Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
Where does YieldStack operate?
Nationwide. YieldStack arranges commercial real estate financing nationwide. Every deal is business-purpose commercial financing, and the broker fee is paid only at closing.
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YieldStack is a commercial mortgage brokerage.